Fighting the Pain in Spain (and Beyond)

Apr 02, 2012

By Pharmaceutical Executive

After several years in roles with J&J and Lilly in the USA, Carlos Plata joined Esteve as Chief Scientific Officer in 2008. His task: to help
overhaul the company’s R&D efforts and see through an ambitious programme of growth and investment, eschewing the incremental, me-too innovation
model for a more radical strategy of ‘embedding innovation in all operational and strategic areas’. As well as expanding its R&D agenda and moving
to consolidate all its existing and upcoming research activities, Esteve has set its sights on building a new ‘network of excellence’, which will house
a variety of frameworks aimed at increasing business development, licensing and strategic partnering. And, after many years of being well known only in
Spain, this private, family-owned company — founded by Dr Antonio Esteve Subirana in 1929 — is ready to become a truly global concern.

But at the same time Esteve was embarking on its major growth plan, things were taking a tumble at home. Spain’s unenviable position close to the
epicentre of the European financial crisis saw the introduction of cost containment measures that were to result in an accumulated growth rate of
public pharma expenditure that registered in negative figures by October 2010. By the end of 2011, the country’s healthcare system was ‘in virtual
meltdown’; not only could Spain not pay its medicine bills — as of February 2012 it owed the pharma industry Euro 6 billion, accounting for half of all
unpaid medical bills in the eurozone — but various provinces could not pay for essential services such as operations or even MRI scans and X-rays.

In light of this, Carlos Plata is keenly aware that Esteve’s ambitions should not encourage “the perception that everything is fine in the
pharmaceutical industry, because it is not”. 2012 is going to be the “worst year so far” for pharma companies in Spain; indeed, for Esteve it will be
the “most difficult year” since it began trading in 1929, Plata says. And it comes after 2011, which, he concedes, “wasn’t a very good year for us
either.” But despite these constraints, Esteve has an advantage in that the company has become very diversified over the last three years; this has
helped it to “not be so dependent on what is happening in Spain,” says Plata. About 50 per cent of Esteve’s sales come from outside the country, either
through subsidiaries in the US and Europe. It also has API manufacturing facilities in China and Mexico.

Plata says that it will take “significant time” for things to improve at home, but the company will continue to pursue the priorities it established
just before the crisis. “The Esteve family is very committed,” he explains. “They understand that the only way the company can be sustained over the
long term is through our R&D. That’s why we’re now thinking on a global basis as far as our R&D is concerned.”

Esteve is openly putting a lot of its R&D eggs into the pain basket. “As you know, opioids work very well but they have significant adverse
events,” says Plata. “We have two innovative programs currently in Phase 2. One is a Selective Sigma-1 Receptor Antagonist, a first-in-class NCE and a
new mechanism of action for neuropathic pain. The second project — for moderate to severe pain —is actually the first new dual API-API co-crystal in
clinical development in any indication as far as we know.”

Much of this push within pain hinges on open-minded approaches to partnership and collaboration. For its ‘network of excellence’ initiative, Esteve
identifies internationally recognized centers of excellence and establishes collaborations with them “wherein we equip their laboratory and they work
on our projects”. The centers hire the staff — they are, after all, Plata says, “magnets for talent.” One of Esteve’s current collaborations comprises
four pharma companies, seven academic institutions and seven small-to-medium enterprises “working towards a single objective: to discover new chemical
entities for the treatment of an indication in pain”. Plata explains: “It means we have had to share what is usually considered proprietary
information. But to do this we have been able to develop a paradigm that allows us to work in a very synergistic manner.”

The company is also involved in other therapy areas; through a public-private partnership, for example, it is developing an HIV vaccine. “The
architecture of this partnership is interesting,” says Plata. True to collaborative form, it features “Esteve as a private company, two government
entities, a philanthropic foundation and two internationally recognized HIV research centres.” Plata adds: “Our job is to translate the science from
these research centres into therapeutic applied research. We already have two lines of research in Phase 1 from this consortium.”

So, while Spanish pharma in general is enduring one of its darkest hours, Esteve is forging ahead — fighting the economic pain as robustly as it is
tackling physical pain. One particular advantage the company has, Plata maintains, is its very independence. “We can make decisions without the kind of
pressures you have in a publicly traded company,” he says. “It allows you to quickly reposition resources, or change the way you do things. We employ
around 2800 people. I think if we had been a public company we’d have had more problems in pursuing our R&D priorities.”

His five-year outlook is thus optimistic. By then, Plata says, “Esteve will have solidified its new way of working in R&D and consolidated its
network of excellence. We will have several R&D collaborations for our own molecules with large companies, which will give us the opportunity to
develop credibility, not only in pain but in other areas too.”